- According to NST, Brahim’s Holdings Bhd has shortlisted
two turnkey contractors to help build its RM130mil sugar refinery in Kuching,
Sarawak.
- Brahim’s sugar refinery is expected to command initial
production capacity of 100,000 tonnes/year, which can be ramped up to 400,000
tonnes/year at a later stage.
- The shortlisted companies are Kumming Light Industrial
Engineering Co Ltd of China and Sutech Group, which has built more than half of
the sugar mills in Thailand. Kunming’s partner in the bid is a low-profile
Sarawak-based company.
- Brahim’s director, Datuk Howard Choo was tight-lipped when
asked to comment on the status of the project.
- He said that the group has shortlisted a few parties and
would be awarding the job soon. The group is targeting for construction to
start in the current quarter. The plant is envisaged to be operational by
mid-2014.
- We are neutral on this development as Brahim’s sugar
refining production, which would be carried out by 60%-owned subsidiary,
Admuda, is not expected to pose a serious threat to MSM.
- We reckon that Admuda would be more of a threat to the
Tradewinds Group instead of MSM. Currently, Sarawak only accounts for about 5%
of MSM’s refined sugar production or about 50,000 tonnes/year.
- In addition, we are of the view that sugar refining is a
challenging business.
- Without expertise, track record and experience, it would
be difficult for a new entrant to manage the volatility of raw sugar prices and
find new customers.
- Going forward, we believe that MSM’s exposure to East
Malaysia would gradually decline as the group focuses more on export
markets.
- This is to mitigate the softness in domestic consumption,
which has been partly affected by the shift of manufacturing operations of a
few large consumer companies from Malaysia to other countries.
Source: AmeSecucities
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